There are currently various systems that are commercially available to financial market participants and their clients which provide a combination of both pre and post trade risk assessments, real-time market data and also trading connectivity to numerous liquidity venues listing financial instruments comprising of securities, options, futures, commodities and foreign exchange. The aim of such systems is to provide financial market trading participants with the fastest available electronic market data and trading connectivity to liquidity venues, while also providing intra-day trading risk assessments for both the participant and also their own electronically connected trading clients.
Since the advent of electronic trading in the 1980's, the number of electronic liquidity venues around the globe has increased dramatically and has resulted a continuing rise in both market data and trading volumes. Since the 1990's greater market data and trading volumes have also been exacerbated by an increase in what is termed Automated Trading (AT), whereby trading entities have utilised computer systems to listen to market data streams and send automated orders to liquidity venues based upon pre-determined criteria. These increases in both liquidity venues and market volumes have increased the trading opportunities for both financial market participants and their clients alike. However as a consequence, they have also led to an unceasing demand to reduce the time latency involved in processing ever expanding market data streams, assessing pre and post trade risk and ultimately sending orders and receiving trades from liquidity venues.
The ability to reduce the latency involved within the market data, risk and trading cycle increases the potential for competitive advantage for both financial market participants and equally their end clients. Market participants that combine the fastest access to liquidity venue real-time market data, real-time risk assessment and also real-time trading will be able to execute trades ahead of their market competitors and ultimately will be more attractive to potential clients, due the likely increase in profits that their higher performing systems will produce. Conversely, the ability to provide pre-trade risk analysis on a more timely basis reduces the potential for market participants and their clients making a trading loss, as market risk exposure can be more accurately calculated and automated remedies enforced. Consequently, the current market place surrounding electronic market data, risk assessment and trading access, is an environment in which the majority of commercial solution providers are constantly seeking to reduce the time latencies of their products to as near to zero as is technically possible.
To date, all companies making commercially available systems have written their software applications to operate on standardised computer hardware incorporating main components of a mother-board, hard-drive, memory, processor/s with a kernel, along with a standard recognised operating system, for example; Unix, Linux or Windows etc. The applications are normally written in standard software languages such as Java, C++ and any other C based languages. The software languages themselves add a given amount of latency to the applications as they are not always specifically designed to provide the lowest functional latency.
System latency reductions up until this point have therefore been gained through increasing and/or refining any one of the main components; for example, increasing computer memory or increasing the capacity and speed of the computer processor. Performance benefits have also been achieved by refining and tuning the software applications to operate at ever greater capacity and speeds.
However, while all of these remedies have helped to improve system performance over recent years, the ability to reduce latency to even closer to zero is at present constrained by the current design in computers that are comprised of multiple components and also the fact that current commercial software providers are only able to utilise this type of industry standard hardware within their applications.
The major issue with current hardware is that each internal computer component including the operating system takes a specific amount of time latency to communicate with other internal and external components via the kernel. The communication between computer components is naturally essential to the operation of current combined market data, trading and risk applications. However, whether the delay occurs in reading a market data stream, analysing current risk or in sending orders to a liquidity venue, the impact is that the overall combined latency of all the functions is increased while each component related to each business function seeks to communicate with other components within the computer mechanism via the internal Bus. This problem has also been exacerbated by current transmission protocols such as TCP/IP and UDP which both add additional latency to current commercially available systems. Inherent to this latency issue is also the current design of PCB's which have not been designed to have functional components situated within close proximity so as to reduce the communication latency between each other.
The latency that each of the components adds to the market data, trading and risk functions reduces the trading potential of the participant and conversely increases the risk to the participant of having over or under exposure to liquidity venues in terms of their overall trading strategy. As a consequence, all existing combined data, trading and risk application solutions suffer latency constraints from the design of current computer hardware which is potentially detrimental to both the trading participant and also their clients.
It is therefore these latency issues that the disclosure below seeks to address by circumventing the issues of current hardware design. Thus, it is desirable to provide an embedded hardware based system which provides real-time pre-trade risk assessments for multiple parties and method thereof and it is to this end that the disclosure is directed.